NEW YORK—Dow Chemical and DuPont said Friday they will merge to create the world's biggest chemical company.
The all-stock deal would create a merged company valued at $130 billion.
The new group will be split into three separate entities: agriculture, specialty chemicals and materials, they said.
DuPont said it will cut staff by 10% following the merger.
Dow Chief Executive Andrew Liveris will become executive chairman of the new company, DowDuPont, while DuPont's CEO Ed Breen will be his CEO.
"This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders," Liveris said in a statement.
The statement added that the transaction was expected to produce run-rate cost synergies of around $3 billion and approximately $1 billion in growth synergies.
"This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies," said Breen.
"Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers," he added.
The merger comes on the heels of activist campaigns launched by Trian's Nelson Peltz at DuPont and Third Point's Daniel Loeb at Dow that prompted earlier moves to spin off low-return divisions and boost shareholder payouts.
RBC Capital Markets last week praised DuPont for having a "sense of urgency" in the face of consolidation in the agro-industry sector after Monsanto sought unsuccessfully to acquire Syngenta earlier this year.
Executives from Dow Chemical last month also vowed to participate in the consolidation wave in agriculture after selling off part of its chlorine business to chemical maker Olin Corporation earlier this year.
DowDuPont will be headquartered in both Midland, Mich., and Wilmington, Del.
In online trading before opening, Dow Chemical fell 0.51 percent and DuPont fell 4.08 percent on the New York Stock Exchange.
Copyright Agence France-Presse, 2015
